Mr Sarkozy's protectionism is causing controversy

France has been blocking attempts by German company Siemens to buy a stake in Alstom, preferring a state bail out.

German Chancellor Gerhard Schroeder is alleged to have called the strategy annoying and nationalistic, according to the Financial Times Deutschland.

He reportedly went on to say France's stance risked damaging cooperation between the two European states.

Controversial

The reported comments came after the German leader took a thinly veiled swipe at French finance minister Nicolas Sarkozy over the weekend.

Mr Sarkozy has been a vocal supporter for state intervention to save Alstom and has said that Paris will ensure the company is not broken up and sold off to foreign companies.

Alstom goods range from turbines to trains

In an interview with French daily Le Figaro on Saturday, Mr Schroeder said that there were "certain declarations from the government or such a member of the government which need to be reconsidered".

The German chancellor declined to be more specific about who he was referring to, but some observers have pointed towards Mr Sarkozy.

A spokesman for the German government declined to comment, saying only that Mr Schroeder had made it clear that industrial policy should not be based on political expediency.

Mr Sarkozy is thought to have ambitions for the French presidency, while later this week there will be elections for the European parliament.

Get together

A meeting between Mr Schroeder and French president Jacques Chirac is scheduled for June 14 in the town of Aachen; the pair meet regularly.

Mr Sarkozy is expected to meet with German economy minister Wolfgang Clement at a later date.

Adding to the tension is the recent success of French drug maker Sanofi-Synthelabo's take over of Franco-German rival Aventis.

Paris had been pushing for the move, while Berlin, it seems, had kept its own objections in check. As a result, it may have been expecting more support for Siemen's advances, analysts said.

Alstom is trying to repair itself after a string of business disasters that lead to it announcing a loss of 1.84bn euros (�1.2bn) for 2003, much bigger than analysts had predicted.

Under the rescue plan, as much as much as 2.5bn euros could be pumped into the maker of ships, high-speed trains and power-generating equipment such as turbines.